Tax incentives for producing biodiesel (including renewable diesel) and alternative fuels, as well as biodiesel mixtures and alternative fuel mixtures, expired on December 31, 2016. Congress retroactively reinstated these tax incentives as part of the Bipartisan Budget Act of 2018 (Act), enacted on February 9, 2018. The Act directs the Internal Revenue Service (IRS) to issue guidance on how taxpayers may make a one-time claim for credits and payments allowable under Sections 6426(c), 6426(d), and 6427(e) of the Internal Revenue Code, related to biodiesel and alternative fuel incentives, and how to claim offsets of Section 4081 liability for Section 6426(e) alternative fuel mixtures, for calendar year 2017. The Act also reinstates the tax liability under Section 4611 related to Oil Spill Liability Trust Fund financing. Below is a summary of the extended credits and the Section 4611 tax liability.
This retroactive extension of the fuel credits is good news for taxpayers that had been waiting for Congressional action to claim these incentives. These taxpayers should expect issuance of an IRS notice detailing the procedures for claiming such credits. PwC will publish a follow-up insight once the IRS Notice is issued. Although it remains unclear whether there will be another extension for 2018, taxpayers should anticipate similar timing for the extension if Congress takes further action on the credits.
Based on the statutory language reinstating the Section 4611 tax, it appears that the tax will be imposed only as of March 1, 2018.